Hello Everybody
Today, May 12 2014, the markets staged a rally, with the NASDAQ (a tech heavy index, as discussed in prior posts), performing best, with a 1.77% gain over the previous session close which was May 9. The other indexes, the SP 500 and Dow Jones, preferably would have returned a similar performance, however they returned 0.97% and 0.68%. Again, the NASDAQ is tech heavy, while the SP 500 is more of a broad based index. Financial press reporting reflects that GOOG (Google) and AAPL (Apple) stock helped lift the NASDAQ higher today. Whether GOOG and AAPL represent the entire universe or the entire US economy is yet to be seen, hence my dependence on the SP 500 versus the NASDAQ as a market barometer.
It should be noted that a gain of 1.7% or higher, in the NASDAQ or SP 500, on higher volume than the previous trading session, qualifies as a Follow Thru Day (FTD), per the authors of Investors Business Daily. Since we don’t have the volume criteria met, today did not qualify as an FTD Day. Lets take a look at a chart of the SP 500:
As such, I hate to say it, but “we have seen this show before.” The markets rally on reduced volume, everybody celebrates and high-fives each other, then they crash a few days later. Can we trickle ourselves into a new uptrend ? A little each day on low volume ? Well I suppose anything is possible however historical studies have shown that all credible uptrends are ignited with strong volume (which we still do not have). Without volume to support the foundation of the house, the house may be a house of cards, liable to fall apart and crash on the hapless occupant.
With that said, my TSP Allocation remains 100% G-Fund. Let there be no doubt, today was a welcome performance and change in behavior from the lethargic back and forth action seen over recent weeks. Now the question remains if this is a short lived event, or the start of a new uptrend. If the latter, I will move my TSP Allocation accordingly. Until then, I remain G-Fund. Nobody is ready to get out of G-Fund more than I am, believe me. I don’t like “hanging out” in G-Fund anymore than the next guy. Lets cross our fingers and see how the rest of the week shakes out.
Thanks for reading and talk to everyone soon…
– Bill Pritchard
